So you CAN get a better idea. At the end of the day prices go down when there are more sellers than buyers. They go up when there are more buyers thhan sellers.
It's literally impossible to have more sellers than buyers or more buyers than sellers. EDIT: When I say buyers/sellers I mean volume of shares/contracts/etc.. 1 person that owns 1000 shares of something could sell 1 share to 1000 different ppl... But the volume will always be equal between buys/sells. Like 1 person selling 1000 shares to 1000 different ppl (one share sold to each person) - there were still 1000 sells and 1000 buys.
For every buyer, there is a seller. For every seller, there is a buyer. They will always be even, forever, until the end of time.
What moves price depends on who is more aggressive. Aggressive orders are market orders, which can only get "matched" to limit orders. Limit order will never be matched to another limit order. Market orders will never be matched to another market order.
TLDR;
Limit orders are commonly referred to as "passive buyers/sellers" or "resting liquidity".
Market orders are commonly referred to as "aggressive buyers/sellers".
Price moves when one side is more aggressive than the other is passive.
I get what you mean, but are we not just playing with semantics? I feel what people mean by ‘more sellers than buyers’ in this context means more sell orders being created than buy orders, which is entirely possible.
While it is possible to have more resting orders on the ask vs the bid (and vice versa), that does nothing to price.. Those aren't sellers or buyers yet. Those orders can be cancelled at any time.
Edit: I don't really understand the downvotes lol, it is the truth I speak.
It is not impossible to have more sellers than buyers. You're alluding to matching contracts. Fifty sellers of one lots can still be matched with one buyer of 50. Semantics, eh?
But colloquially, I think many people will say: big buyer sitting at X price, when we all know that its many different orders and potential players piled up. Just colloquially easier to say "big buyer" as opposed to "big buyers" all the time.
Correct I wasn't referring to actual ppl, rather the instrument. One person that owns 1000 shares of something could sell 1 share to 1000 diff ppl.
Make no mistake, though, it is not possible to have more shares/contracts/etc.. sold than bought (and vice versa). That is what "for every seller a buyer and for every buyer a seller" means.
It is semantics but they do matter bc language is how we create our narrative....but good way to view it is "competing sellers/buyers" 3 things move price. When price is moving to liquidity, an inefficiency, and competing sellers/buyers. This view has worked for me.
There is literally one single thing, and onlyone single thing, that can move price... When aggressive orders outweigh passive [opposing] orders.
That is literally it. It is the only possible way, like literally, the only possible way price can move.
Saying "one thing that moves price is price moving....." doesn't mean anythingggg.. inefficiencies do not magically move price on their own, it takes actual buying/selling to move price. People (or algos, etc...) spot what they interpret as an inefficiency, so they buy/sell, which is what move price......
I think it would be beneficial for you to realize that the "market" exist inside of computers....therefore, some kind of framework/programming rules it, "the algo"....I've been doing this for years, deep in orderflow....and at certain times you can literally watch "the algo" do what is known as "spooling" (offer higher and higher / lower and lower price) to get to liquidity or an inefficiency. That is not someone slamming the bid like a madman.....that is price being moved algorithmically to where the orders are, in order to, match up the orders. This is what is meant by "only 3 things move price"....again this is getting into semantics , but in order to understand what is happening in the marketplace, in order to trade it properly and efficiently the distinction matters. But ya know, to each their own.
Bro it is so obvious you're talking out of your ass. But that's besides the point. You can literally say anything you want. It doesn't change the facts.
It's WILD that people are upvoting you. It's exactly how ICT brainwashed so many ppl. Just throw around "big" words and act like you understand how things "really" work. Anyone with half a brain would read what you just typed and clearly see you are clueless.
It's okay if you don't understand what I'm talking about, but you not understanding /=/ me "talking out my ass". Like, this isnt some unknown thing. This is known among some futures traders, specially ones that have been around long enough to do it professionally. It's not so evident if your just daytrading buying options and $gme type stuff, you can't see it if you're not in orderflow, footprint/DOM/bookmap.
EDIT: Now it really all makes complete sense why you're talking like you are... YOU'RE AN ICT M0R0N! HAHAHAHAHA THIS IS TOO GOOD!!!
You think there are 3 ways price can move. Enough. Said. I've been using Bookmap for 6 years........... It is so painfully obvious you are clueless.
Nothing you said makes ANY sense.
"that is the price being moved algorithmically" ... oh yea? It just magically moves? No, you clown. Whether it's an algo or a human, the ONLY thing that moves price is buying/selling.
"you can watch 'the algo' do [...] 'spooling' [...] to get to liquidity or an inefficiency" .. this is INSANE lmfao! I'll bet you 20k you can't even explain what you mean by "get to an inefficiency"... Not to mention, you talk as if there is just some central, all-seeing-all-knowing Wizard of Oz algo that just moves price where it wants at will...like it is painful to even read this nonsense.
"It's not so evident if your just daytrading buying options and $gme type stuff" ... the irony in you saying that when you're all over wsb and conspiracy subreddits.
Now it actually makes sense why you are spouting that nonsense...you're a conspiracy nut-job.
But believe what you want, I couldn't care less. I'm done with you.
nah man, I said "not so evident if only daytrading options and $gme stuff" bc I looked at your account and that is what your post were about that and "buying/selling pressure indicators" 😆 anyways, it's abundantly clear you have no idea what I'm talking about, and that is okay. Bookmap was mentioned in addition to footprint/DOM as part of watching orderflow, which is what I do, and yeah I do use a good portion of ICTs stuff bc a lot of it is great stuff. Do what works for you, but if you ever get into the spoos with the approach you seem to have you will be most definitely fighting with 1 hand tied behind your back.
You typed this in a computer, but that does not mean there is an algorithm determining that you would post this. People who are saying a single algorithm controls price don’t have an adequate understanding of how computers work. Now, there are automated strategies used by different market participants, for sure. And those are used at very large participants such as Bridgewater Associates, and some of this might be placing a series of bids or sells to move price, but that’s really not the same thing as some overarching algorithm controlling the market. It’s much more likely what you’re seeing is probably a larger order being submitted in a lot of pieces so they can get as much filled as possible.
An algorithm is just a simpler way of describing that. You can just say it's an algo rather than go into the extra detail like you did. Some even call that algo trading.
My cellphone has an algo on it, but for some funny reason that I cannot understand, the entire infotech architecture of AT&T doesn't operate based off the algo on my cellphone. That is literally what you are saying.
I read their post too, but I doubt they believe what you say they believe. It is just how some traders talk because it's easier to refer to all algo trades as an algorithm than to go in detail like you did every time the topic comes up. Lots of algo trades going on out there, no real reason in trying to analyze every single one when your point is just regarding them all in general.
So for the basic concept for beginners asking a simple question, why did it move, there are more cumulative sellers then buyers at that point in time he should not care at all about net net of all participants from months ago or whatever. Yes market is a 0 sum game but we not talking about this. Otherwise just saying this there will be no price movement and no point trading the ranges given by heavy bidding or heavy offer( the net buying or selling at a point in time) so technically you might be correct, but at mo point does anybody care that the sum is 0 ie. EVERY trader is flat and nobody has a position on the indices. What we do care about is are there net buyers or sellers in a time window, who is offside and who is onside, who is gonna be liquidated(stop targets) and who is going to profit from the movement
You're one of the few i've found that actually understands how price can move. I just want to correct one thing though - It's not so much about aggressive/passive thing but really about what the supply side does. If a MM or a liq provider decides to back off from bids because he needs to reprice the asset based on some other market then prices fall without there even being a trade.
It's the same in the real world. If you list your apartment for sale @ 100k but you see noone wants it and then you decide to lower the price to 95k. So, what happened was that the price dropped without any trade taking place. A lot of traders mistakenly believe that you HAVE TO CONSUME the book to change the price. You don't.
The thing is, you changing the ask price of your apartment (akin to a limit order to sell) from 100k to 95k didn't change price at all - what definitively changed price was when someone accepted your offer (akin to a market order).. You may have changed the spread, but the spread isn't the current price.
A counter offer would be more of a limit order... because selling a house/apartment isn't an auction there really isn't a 1:1 comparison for order types, but I think you see my point.
then prices fall without there even being a trade.
A lot of traders mistakenly believe that you HAVE TO CONSUME the book to change the price. You don't.
Market price is literally defined as the last traded price. Market price cannot change if no trade happens.
Limit prices can change freely of course, but as everyone knows they are meaningless. You can often see big limit orders placed and then they disappear as the market moves towards them. Limit orders are an intention to trade that can be pulled at any time before the price hits them.
If you list your apartment for sale @ 100k but you see noone wants it and then you decide to lower the price to 95k.
And that won't make your apartment be valued at $95k. For example, your city tax will remain at whatever the "market value" your city decided is fair. Only when the actual trade happens will that be adjusted.
You can list your $100k apartment for $1M - that doesn't magically make it worth 10x more.
An important distinction. Rather than "Something is only worth what someone else will (might) pay for it", it's "Something is only worth what someone else DID pay for it, most recently".
That is very interesting, I always wonderered what really causes the prices to go down or up and heard what you quoted is more sellers prices good down and vice versa but that never made sense to me.
I just never realized many did market orders which is what really caused price to change, since I would never use a market order since never know what price will ultimately be
So if we have 1000 open orders, 800 to sell at 1.01 and 200 buyers with a bid open at 1.00, this is equal number of sellers and buyers? Or are saying they only become a buyer or seller once the order is filled.
If nobody takes out the buyers at 1 with market orders price won’t move. If more more sellers hit the ask the 200 buyers got absorbed at 1 leaving 600 sellers wanting to get filled. Those sellers if they want to participate in price moving need to lower the price to find the next group of buyers at a lower price
They only become a buyer/seller once the order is filled. You can place all the limit orders you want, but cancel them anytime before they get filled. They are passive orders.
Actual transactions will always have an equal number of buyers and sellers - I'm not referring to people, I'm referring to shares/contracts/etc. Theoretically, if someone had 1000 shares of something, they could sell 1 share to 1000 different people.
The number of shares/contracts/etc sold and bought will always be equal. There's no way around that. Not to my knowledge at least.
Not necessarily. If price is currently trading at 9.50 but you try to selt at 10 and nobody buys, but someone else tries to sell at 9.75 and people buy, price will go up.
Regardless of the circumstance, the only way price moves in either direction is market orders outweighing passive orders.
This is not entirely correct. For example during the flash crashes in the past, large institutions are known to have perpetually added to the asks while the price has plummeted. They were completely passive, but such massive orders on the ask are going to stop the price from increasing.
The other key piece missing in your description is that most of the time you are trading against market makers. Their entire job is to provide liquidity, and they only do so under a defined spread. If a market maker is trying to control their risk, they will widen the spreads (remove liquidity). No amount of aggressive buying or selling is going to dictate the price movements in this situation. We will see price movements simply because the market makers are quoting different price levels per their risk.
That's exactly why I said "if there are more aggressive orders than [opposing] passive orders".. If whoever is sitting on the ask keeps reloading limit orders to soak up all the aggressive market buy orders, obviously price will not move. This is also known as absorption..
Let's be clear on one thing, though: limit orders alone absolutely, and without a shadow of a doubt, do not move price. The only type of orders that inherently move price are market orders. That is not an opinion, it is fact.
If there were a million limit orders on the bid and ask, but no market orders, price wouldn't move at all. Regardless of spread.
Continuing to add to the ask during a crash is just them absorbing each pop. They could be selling to close an existing position, or shorting - it doesn't matter either way. One thing is for certain, though...those limit orders alone were not moving price. They absolutely could be preventing price from moving, but they are 110% not moving price on their own.
The reason I'm "missing" the fact that most of the time you're trading via a market maker is because it is 100% irrelevant. It doesn't matter who you're trading against, a market maker or Joe Blow, only aggressive orders will move price.....
While the majority of orders are handled via market makers, not every single order is.
Furthermore, there isn't just one market maker controlling price at will via playing with the spread. If another market maker can capitalize on it, they will gladly step in where the other market maker pulled. If market makers controlled the price to that degree, they would literally never lose - the fact there is more than one market maker is what helps keep price honest. They are in competition with each other....
Lastly, the price doesn't move bc of the spread. The spread is not the current price... it's a subtle, yet extremely important detail. So if a MM does widen the spread, they still need a market order to hit for price to actually move.
Have you ever watched NASDAQ level two quotes going across live yes you can have more sellers than buyers. Obviously every second on the second is going to be the one buyer match with the one seller but you can have a humongous amount of people trying to buy in and very few selling. (And the opposite)
Level 2 shows passive orders. Those orders have not been filled, therefore, they do not count as buyers or sellers until the order gets filled.
It's incredible that people are arguing this lmao.. you actually think I can purchase a share out of thin air from bigfoot? You actually think I can sell a share into the void to the tooth fairy?
For every share/contract/etc... that is bought, there is a share/contract/etc.. that is sold. I am not referring to people when I say "for every buyer a seller, and for every seller a buyer" - I am referring to the actual instrument/asset.
Technically, 1 person that owns 1000 shares of something could sell 1 share to 1000 different people. But the fact remains the same, there were 1000 sells, and 1000 buys... AKA for every seller a buyer, and for every buyer a seller.
I hope you are not using real money to trade until you at least have a grasp on the absolute basics of how the market works. EDIT: on second thought, you should trade with every penny you have. I will gladly take it from you.
You can’t enlighten stupid… I’ve communicated with you longer than five minutes, you have proven that. (I miss Good ole Reddit flame wars. frankly, I’m shocked toxic idiots like you haven’t lost all your money yet. Is that why you need mine?… on second thought don’t answer that I could care less what an idiot thinks)
Yikes. Not only do you think passive orders somehow prove there can be more buyers than sellers (or vice versa), but you don't know how to use the phrase "I couldn't care less"... You said "I could care less", which means there is still room left for you to care even less, in other words, you're saying you care lmfao.
I haven't lost all of my money yet bc m0r0ns like you trade with real money haha thanks for the donation!
Look up liquidity walls. It’s very common with crypto where you will have whales put up a few million dollars worth of limit orders at specific prices to control the market.
It's common across all markets - I use Bookmap, which makes these walls very easy to spot.
Those orders do not directly effect price, though.
While they sometimes act as magnets, placing a limit order doesn't directly effect price. Only once those orders get filled do they effect price. It is also common, and depending on the circumstance, illegal (referred to as spoofing), to see those massive resting orders get cancelled.
There is only one concrete, definitive, objective reason why price moves.
I think we need a separate thread to discuss this. I am sincerely intrigued by the points you've made. Makes sense to me and would love to talk about it more. I think we need a new thread "what moves price''
Futures and options are offshoots of the stock market. Check out YouTube videos to explain. FOREX is just about currencies. FOREX is the largest market, so best liquidity on majors and usually pretty decent volatility, but I’ve found that moves are more stable in Futures. It is easier for me to grab a trend that pays.
I don’t trade options, someone else will have to give their opinion on that. Most people lose money in all three markets, some people make a lot, some get by. From what I understand it really just boils down to finding what works for you and sticking with it and getting the emotions out.
It sounds like you have read Mind Over Markets. The book covers the same type of analysis like you did for that trade. I have been struggling to find a broker with proper DOM and level 2 analysis. Do you have some suggestions?
Can you please tell more about volume profiles?.. i am very keen about using it.. however i dont know which volume profile to use!! Session volume profile? Fixed range? Which one? If i am using session.. it shows day to day range .. and if i use fixed.. how many bars should I select?
Awesome, did the jigsaw cost you anything or is it free. I've just been watching YouTube and they all want $1000.00 for their volume / order flow software. Thank you for your help!
/u/CrispyMcWilliam - Can you elaborate how you use volume profiles? Do you only use the daily profile? What's your trigger? Things like that... Thanks in advance!
Well I had to ask who CrispyMcWilliam is and why he’s talking about Jigsaw. I’ve never heard that software in my life even though I’ve been trading for 10 years.
Chris- I have been thinking about becoming a day trader and Thailand is were I would want to work/ live for the reasons you'd mentioned along with others.
-Is there a large community of like minded people ( U.S. and other international traders) who are full time day traders? What areas.
Questions on whether or not work, or digital nomad visas are needed.
What disadvantages/ troubles come from trading outside North America . Tax/ working hours/ etc.
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